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ADIA to expand private equity, other alternatives following positive 2013

1 Jul 2014

dubai-highway-387834-mMammoth sovereign wealth fund the Abu Dhabi Investment Authority plans to up its investments in infrastructure and other alternative assets in 2014 after hitting its return target for the asset classes last year.

The UAE-based authority is looking to allocate between five and 10 per cent of its capital to real estate, between two and eight per cent to private equity and up to five percent into infrastructure according to its 2013 review.

ADIA managing director hamed bin Zayed Al Nahyan said, “We have built out our investment teams in the illiquid space, such as real estate, infrastructure and, more recently, private equity, adding considerable expertise across geographies and asset specialisation.

“These efforts have strengthened ADIA’s ability to take a holistic, global view of its investments, while also allowing us to target more specific opportunities with attractive return characteristics.”

Overall ADIA had achieved annualised returns of 7.2 per cent over the past 20 years at the start of 2014, although did not reveal the split of its returns by asset class.

The report said its private equity department had a busy year in 2013, reviewing a wide range of investment opportunities across primary, secondary and co-investments.

The author states, “Focus remained on engaging earlier in the execution of negotiated co-investments with external managers and companies, with an active role in setting valuation and terms of transactions.”

Despite the positive comments on alternatives ADIA still plans to invest a significant amount of its capital in development equities, with the range estimated at between 32 and 42 per cent.

ADIA manages the surpluses of Abu Dhabi’s earnings from oil exports and has assets estimated at $773bin according to the Sovereign Wealth Fund Institute.

ADIA’s infrastructure investments in developed markets during 2013 included two ports in New South Wales, Australia. It also took advantage of improved market conditions to exit its investment in Sydney Airport.

Earlier this year ADIA hired former Caspian Private Equity partner Andrew Kripke as a portfolio manager in its US fund investment business to focus on sourcing, due diligence on and monitoring of private equity funds.

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